HG MARKETS:

Crude oil prices are trading within a narrow range on Monday, maintaining levels similar to those observed last week, as traders await the highly anticipated OPEC+ meeting scheduled for Thursday. This meeting, considered one of the most important for oil market, will focus on key decisions regarding oil production strategies heading into 2025.Ahead of the gathering, Iranian official AfshinJavan stirred controversy by publishing an opinion piece in which he criticized OPEC+ for its role in driving current low oil prices. Javan’s main argument is that OPEC+ has kept oil prices artificially high for an extended period, which has inadvertently financed competitors by creating incentives for the development of cheaper alternatives. His remarks are expected to spark considerable debate among OPEC+ members during Thursday’s virtual meeting, particularly as the group considers extending its production curbs in an effort to manage the market.

In addition to these developments in the oil market, global currency markets are also reacting to recent fluctuations in the strength of US Dollar. The US Dollar Index (DXY), which measures the strength of the dollar against a basket of major currencies, has gained traction following comments made by former President Donald Trump, consequently limiting gains in oil price. Over the weekend, Trump threatened to impose tariffs if BRICS nations (Brazil, Russia, India, China, and South Africa) attempted to replace the US Dollar with their own currency as the global reserve.

The Euro (EUR), which is a significant component of the DXY, is facing pressure due to political instability in France. Speculations are  rising that the French government could face a no-confidence vote as early as this week, with far-right leader Marine Le Pen threatening to support the motion unless the government agrees to certain budgetary demands. French Finance Minister Antoine Armand stated on Bloomberg TV that France would not allow itself to be “held hostage,” but markets have already begun to react negatively, with French sovereign debt taking a hit as investors anticipate increased political turmoil.

This mix of geopolitical tensions, political instability, and economic uncertainty is contributing to the current market volatility, with traders closely watching developments in both the oil and currency markets.